No Tax on Overtime for Nurses: Hourly vs. Exempt and the 8-and-80 System

By the TaxCut Calculator Editorial Team · Updated November 14, 2026 · Figures checked against official sources · How we verify

Which nurses earn FLSA overtime

The Department of Labor's fact sheet on nurses (FS #17N) says registered nurses who are paid on an hourly basis should receive overtime pay. RNs registered by the appropriate state board generally meet the duties test of the learned professional exemption and, if they are paid on a salary basis of at least $684 per week, may be classified as exempt. Licensed practical nurses and similar health care employees generally do not qualify as exempt learned professionals and are entitled to overtime. Only overtime that the FLSA requires is "qualified" for the tax deduction, so an exempt RN's extra pay does not count even if the employer pays a bonus for extra shifts.

The 8-and-80 system and 12-hour shifts

Under section 7(j) of the FLSA, hospitals and residential care establishments can compute overtime over a fixed 14-day period instead of the 40-hour workweek, as long as there is an agreement or understanding with the employee beforehand. Under that system the employer pays time-and-a-half for hours worked over 8 in a day and over 80 in the 14-day period; daily overtime premium can be credited toward the over-80 requirement. This matters for the shift pattern most nurses actually work.

Worked example: the same nurse under two overtime systems

A nurse paid $42 an hour works three 12-hour shifts a week (36 hours) for 50 weeks. We compare the tax effect (2026 tax year, single filer) under the standard system and under 8-and-80, then add a nurse who works four 12s (48 hours) under the standard system.

With three 12s a week, the standard system produces no overtime at all, but under 8-and-80 each 12-hour shift has 4 daily overtime hours, or 24 per 14-day period. That's 600 overtime hours across 25 periods and $12,600 of half-time premium, which exceeds the $12,500 cap by $100. The four-12s nurse earns 400 overtime hours under the weekly rule. Your actual numbers depend on your employer's work period; look at your pay stub.

Illustrative. We assume 50 working weeks, no shift differentials or bonuses, and that daily overtime under a valid 8-and-80 agreement is "required under section 7"; see the FAQ about that reading. The deduction can't reduce taxable income below zero.

Shift differentials, bonuses and multiple jobs

The Department of Labor's health care overtime fact sheet (FS #54) says the regular rate includes the hourly rate plus certain extras such as bonuses and shift differentials, and warns that errors are common when an employee works two or more different jobs in one workweek. For the deduction, the half-time premium is calculated on the regular rate. If your W-2 box 12 code TT figure looks low, compare it with your pay stubs: shift differentials and certain bonuses should increase the regular rate.